How to Remodel a Home Successfully, According to Real Estate Experts

  • Real estate investors Aria Khosravi and Alan Blue have made 91 flips, they told Insider.
  • Her experience has taught her the importance of knowing your numbers inside and out.
  • They have also learned to look for the most important items of a property, such as the roof, when evaluating offers.

When high school friends and business partners Aria Khosravi and Alan Blue flipped their first home — a fixer-upper they bought for about $95,000 in Fort Collins, Colorado — they weren’t quite sure what they were getting themselves into.

“My background in construction prior to this first turnaround was screwing in a lightbulb,” Khosravi told Insider.

Despite their lack of experience, they renovated it on a budget of less than $35,000 and made about $20,000, Blue said, adding, It was “more money than we could have imagined.”

Since executing that deal in 2009, investors have made 91 flips, mostly in the Denver area, they said. In 2022 alone, they did 15 of them and grossed $1.2 million, according to an income statement for their LLC viewed by Insider.

Not every deal was a success.

Losing $9,000 on their second flip, Blue noted, “It was a blow to lose nine grand after putting your heart and soul in one place. But at the same time we learned so much and could see our mistakes.”

After more than a decade of experience, they’ve learned that “no flip goes super smoothly to plan,” Blue said. “There are always things that come up. But once you have systems in place, you can manage those things and still get a good result.”

The experienced pinball players shared four keys to executing a successful flip.

1. Know your numbers: how much renovations cost and what you can sell

Her experience has taught her the importance of knowing her numbers inside and out, Khosravi said: “If you can’t determine the true cost of reselling the house and you don’t know how much it will cost to get it back in To bring order, you will find yourself in a difficult situation in front of the gate. You’re just going to keep your fingers crossed and hope it works out.”

But knowing your numbers gives you more confidence.

“When we buy our properties there is very little risk for us because we know exactly what the price the house will sell for and we have a pretty good idea of ​​what it will cost to sell it fix it,” Khosravi said. “Are we accurate to the dollar on both of them? No. But if you can get enough profit, then if there’s a rainy day or the market turns or the sale takes longer, you’ll still be fine.”

When considering real estate, remember that location can significantly affect the value of the home.

“In some neighborhoods, you can have $60,000 from a home that is on a major street or backs onto a freeway versus a home that is not,” Khosravi said.

It’s especially important to pay attention to the home’s surroundings today, he added, as the market is changing and more inventory may show up next year: “As the market goes down people get a lot more picky and so do houses that move into less desirable locations within the neighborhood must be sold at a lower price in order to sell them. There is simply no way around it.”

2. Talk to several general contractors before hiring one

Finding the right general contractor to help with renovations takes time and effort — but it’s the key to a successful turnaround. Especially if you have little to no building background, this is the person you can count on to turn a fixer-upper into a marketable home.

Khosravi and Blue struggled with this move early on.

Aria Alan Blue

Khosravi and Blue’s first flip, a fixer-upper in Fort Collins, Colorado.

Courtesy of Aria Khosravi and Alan Blue

“We eloped so many contractors,” Khosravi said. “They just didn’t show up or it took a lot longer than expected.”

To avoid hiring an underperforming contractor, “talk to 10 different people before starting a job,” advised Blue. “Call up references, make sure you’ve seen their previous work, get shown projects they’ve completed, and don’t take everyone’s word for it. For your part, do as much due diligence as you can.”

3. Pay close attention to the high-priced items in a property

When evaluating bids, Khosravi and Blue look at aspects of the home that could potentially cause big problems and consequently cost them big bucks to fix.

These important items include the roof, foundation, furnace, air conditioner, and sewer lines. Note that these items may be more or less important depending on where you shop. In Colorado, for example, it’s especially important to look at a home’s foundation and plumbing, they said.

When walking through a prospective home, “look for any visible cracks or door frames that aren’t perfectly square or doors that don’t close properly,” Blue said. “You should look at the age of the stove. How is the air conditioning? How old is she? The same goes for the water heater.”

It’s easy to overlook problems, especially if you’re a new investor eager to close a deal. But that could be a costly mistake and quickly throw you over budget during your renovation, Blue warned: “You might think I can easily do this for $25,000 or $30,000. But that’s it If the roof is good If The sewerage is good If The oven is fine.”

4. Stick to conventional, more traditional house layouts

The second house Khosravi and Blue bought to flip (the deal that saw them lose $9,000) was “a crazy property,” Blue explained. Among other quirky features, “it had this big, weird, detached garage with a mother-in-law suite above it.”

That’s one of the reasons they lost money on the sale, Blue said: “We’ve had fewer buyers wanting to look at a property this unique.”

He and Khosravi learned that people tend to like “standard layouts,” such as two beds, two bathrooms with a kitchen and dining room. “When you’re looking at a home that feels unconventional when you walk in — maybe the kitchen or bedrooms are super small, or it doesn’t make sense where they’re located on the floor plan — don’t overlook that. Because if you feel kinda weird looking at it, as will the potential buyers.”

While Khosravi and Blue’s experience can help you avoid common mistakes, go for the first roll knowing that things probably won’t go exactly to plan.

“When you experience every situation at least once, you learn how to deal with it,” Blue said. “We made a lot of mistakes along the way and they cost money. You pay for your education one way or another and we chose to do it in the field. But now that we’ve been doing it for a long time, we know what to expect and we know what to look out for.”

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